Panaji, Goa – September 25, 2024: The Goods and Services Tax (GST) Council’s Group of Ministers (GoM) meeting in Goa has concluded without any decision to provide further exemptions for long-term land leases. The GoM, tasked with examining the issue, deliberated extensively but ultimately failed to reach a consensus on extending the current relief measures.
The current GST regime exempts long-term land leases of more than 50 years from the tax. However, there has been pressure from various stakeholders, including real estate developers and industry associations, to extend or even eliminate this exemption. The argument is that the current exemption benefits only a select few, while the majority of real estate transactions are still subject to GST.
The GoM, comprising representatives from different states, explored various options to address the concerns raised by the industry. However, differences in opinion among members prevented them from arriving at a unanimous decision. Some states advocated for maintaining the current exemption, while others argued for its removal or modification.
The GoM’s decision to maintain the status quo on long-term land lease exemptions is likely to disappoint the real estate sector. The industry had hoped for a relaxation of the GST burden, which could have provided a much-needed boost to the sector. However, the GoM’s stance may have a limited impact on the overall real estate market, as the exemption primarily benefits high-value land deals.
The future of long-term land lease exemptions remains uncertain. While the GoM’s decision may be seen as a temporary setback for the industry, it is possible that the issue will be revisited in future GST Council meetings. The government may consider other measures to support the real estate sector, such as reducing GST rates on construction materials or providing incentives for affordable housing.
In the meantime, real estate developers and investors will have to adapt to the current GST regime. While the exemption for long-term land leases may be limited, there are still opportunities to optimize GST planning and minimize the tax burden. As the real estate market continues to evolve, it is essential for stakeholders to stay informed about the latest GST developments and seek professional advice to navigate the complexities of the tax landscape.
